Friday, 11 March 2011

Naked Wines really is naked, in the sense that there’s maximum transparency and openness between customers and winemakers. This closeness is incredibly social – customers and producers are in constant dialogue online at http://www.nakedwines.co.uk/ – but there’s also commercial closeness.

Naked Wine’s model is to fund the winemakers directly – so it operates almost as a venture capitalist as well as an online retailer. This cuts out the need for a whole host of middle men, provides winemakers with a steady guaranteed income, and allows customers to enjoy good product at competitive prices.

According to founder Rowan Gormley, who will be the closing keynote speaker at Internet Retailing Insights on 24 March, it’s a model that wouldn’t be practically possible without the fast, low-cost and social nature of the web.

“Quite simply we are a social business,” says Gormley. “The only way you can do this on the required scale, is if you get thousands of people involved and connected. It has to happen online.”

Gormley says that with the traditional retail model for wine, what is essentially quite a cheap product can quickly become expensive, once you factor in the costs for winemakers of seeking out buyers, and then those buyers marketing the wine to the end customers. “So we wanted to do things differently. We have set out to create a virtuous, rather than a vicious circle, so that both suppliers and customers are better off than they would be in the traditional model.”

He says the team of 12 who left Virgin Wines in 2008 also wanted to harness the power of social media to make the service completely transparent and open, so that the human element of winemaking and talking about wine was celebrated, rather than lost in the commercial process. The other element of the business that they believe differentiates them is offering fast, good value delivery. Customers enjoy next business day delivery for £4.99 from the Northampton depot.

There are now 85 independent winemakers all over the world selling through Norwich-based Naked Wines, and over 100,000 customers enjoying the fruits of their labour. Gormley says that sales generate £1m a month for the company to invest back into the winemakers.”There’s a greater sense of trust among customers who feel engaged in the whole process of winemaking and are connecting with the producers, seeing their feedback being used, and talking to other enthusiasts about what they like and don’t like,” he says.

Customers who sign up as ‘Naked Wine Angels’ and pay £20 a month, are given preferential prices – a third off – in return for their commitment to investing in the winemakers, and they get the £20 back off their next order as a gesture of goodwill. “We’d rather give customers a third off than spend that same amount on marketing, direct mailing and so on. And it provides real security for the winemakers. They know the wine is sold before they’ve even grown the grapes. Then they can spend all their time in the vineyard crafting delicious wines. It’s also better for the planet to cut out all those marketing activities,” says Gormley. The fact that there are now 46,386 Angels is testament to the success of the initiative.

In little more than two years the Naked Wines team have built a remarkable business. It hasn’t all been plain sailing of course and at the Insights Conference, Gormley will explore the lows as well as the highs. He’s upbeat about the future. “I think there’s a huge amount of growth still to come online,” says Gormley.

“So many people are buying over-priced mediocre wine but they are slowly learning there are different options out there. And there are countless instances in retail where the web can reach out to really engage with customers in a refreshing way, working socially rather than purely on a commercial level. We think that once you give someone a product that impresses and engages, and can offer competitive prices, they will stick with you for the long term.”